Inadequacies of the statutory definition of "capital asset" have led the courts to develop the concept of "business property," which serves to distinguish everyday business activities from investment activities.This concept is now being applied by courts in a wide variety of factual situations involving corporate securities. However, unless objective, easily ascertainable limits to the "business property" concept are found, confusion and inconsistency may mark the development of future case law. The rules developed by the American Law Institute's Discussion Draft Study of Definitional Problems in Capital Gains Taxation appear to provide these objective limits. Because they are consistent with the Corn Products doctrine, they should be used by courts confronted with a "business property" question. However,the best solution to the problem would be congressional enactment of a more meaningful definitional statute.
Thomas G. Bost,
Corporate Securities As "Business Property",
20 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol20/iss6/4